When an injured party cannot return to work following a car accident, either because of physical limitations or emotional trauma, they may be entitled to compensation for lost wages. It is important to understand how lost wages are calculated after a Colorado car accident.
Lost Wages After a Colorado Car Accident
A proper evaluation of damages stemming from a car accident requires the consideration of lost wages and lost earning capacity. This is because the measure for damages in a personal injury case is the dollar amount that will restore the victim to the financial equivalent before the injury. Accordingly, people who suffered lost wages after a Colorado car accident may be entitled to recover damages.
What Are Lost Wages & Lost Earning Capacity Damages
Lost wages and Lost earning capacity damages compensate victims for an impairment of the ability to earn money that would have existed but for another’s negligence. The standard measure of damages for lost earning capacity is stated in general terms as the difference between what the victim could earn before the negligent conduct and what the victim made. Loss earning capacity is based on hypothetical events. Because predictions about earning potential are necessarily speculative, there is usually some level of uncertainty inherent in any determination of lost earning. Consequently, Colorado courts make clear an exact calculation of what a victim would have earned is unnecessary.
Demonstrating Lost Wages After a Colorado Car Accident
Proof of income is simply documentation that shows lost wages after a Colorado car accident. Any income can be used so long as there is documentation to support the lost wages claim. The following is a non-exhaustive list that can be used to bolster the value of a personal injury claim by highlighting lost wages and lost earning capacity:
1. Pay Stubs
A pay stub is a summary of a person’s earnings for a specific date, usually the day a person was paid. It includes information relating to income, pay schedule, after-tax net pay, and information about the employer. Pay stubs are the easiest and most common way to demonstrate lost income. Pay stubs can also be used for victims of personal injury who are self-employed.
Importantly, even if a person did not lost income, they may have used other benefits from the employer. Had the accident not occurred, the sick and/or vacation time would not have been used for any purpose of the victim’s choosing, and therefore constitutes a loss of wages that must be compensated. Pay stubs can reveal information regarding the use of accrued sick and/or vacation time while a person was recovering from accidents caused in a car accident.
Obtaining copies of pay stubs is relatively straightforward by requesting them from an employee’s manager or human resource department.
2. W-2s, Wage and Tax Statements, or 1099s
W-2s, Wage and Tax Statements, and 1099s are used to report wages paid and taxes withheld for each employee in a given calendar year. Employers are required to provide W-2s and 1099s to all employees following the end of the calendar year. These documents can be used as additional evidence of income. In a wage loss claim, it is not difficult to highlight a person’s income in the years leading up to the car accident versus and thereafter.
3. Tax Returns
When a victim of personal injury has a continuous earning history, tax returns frequently reveal pre-injury earnings versus post-injury earnings. In turn, this allows an insurance adjuster to compare and contrast earnings. While tax returns provide a useful summary of financial data relevant to lost wages and lost earning capacity, they are not always the best way to prove a financial loss because the data may not necessarily be clear.
4. Proof of Income Letter
An injured party’s employer can help demonstrate lost wages by drafting a correspondence, outlining information relevant to this evaluation. At a minimum, the employer should consider including information relating to the individual’s job title, date hired, typical number of hours worked per week, regular rate and frequency of pay, overtime rate, the number of hours of work missed, and the amount of money the employee could reasonably have expected to receive in regular pay, overtime pay, commissions, and/or bonuses during that period.
5. Documents Evidencing Forfeited Advancement Opportunities
Forfeited advancement opportunities are a valid potential source of recovery in a personal injury claim. Evidence relating to job growth or increased income could take the form of ongoing correspondences discussing a prospective venture and interview schedules which were subsequently canceled, to name a few. Although the quality of available information regarding the value of missed opportunities may be difficult to obtain, it is not unheard of for personal injury victims to receive compensation in this realm.
6. Expert Reports
When it comes to proving lost wages and lost earning capacity, expert witnesses are sometimes required. First, a vocational expert can identify and evaluate the kinds of jobs an injured person might be suited for compared to his or her pre-injury job. The vocational expert can then help determine the wage range for new, post-injury jobs. This information can then be used to compare the pre-injury wages, as demonstrated on a person’s tax returns, to the post-injury wages that are likely.
In addition, an accountant or economist is sometimes necessary to determine whether the wages from the injured person’s new vocation are likely to increase, decrease, or stay the same in the future. This expert can also calculate any impact inflation may have on future wages.
Supporting Medical Records
It is also important to remember that, by themselves, tax returns and W-2s are not enough to prove lost wages. Insurance companies also require a medical note from a qualified doctor, explaining exactly why the injured person should refrain from working. Without a doctor’s note, it may be difficult to collect lost wages.
Contact an Attorney to Discuss Lost Wages After a Colorado Car Accident
If you or a loved one suffered lost wages after a Colorado car accident, contact a qualified and knowledgeable attorney from Bowman Law at 720.863.6904 or email us. Our experienced Colorado car accident attorneys are standing by to speak with you about lost wages and serve Denver, Boulder, Colorado Springs, and Fort Collins and the surrounding areas.
Jerry Bowman
Owner and Managing Attorney
Jerry Bowman, J.D., M.A., Owner and managing attorney of Bowman Law LLC, takes his responsibility to the legal profession seriously and dedicates his time and effort to providing quality and competent legal representation to clients in Denver and throughout all of Colorado. He holds an MA in Political Science from Wayne State University and earned his law degree in two and a half years from Michigan State University College of Law.